Gold prices are headed for a fifth monthly decline, the longest stretch in four years, after the Federal Reserve raised interest rates, weakening the allure of the non-interest-bearing metal. 

Gold prices are headed for a fifth monthly decline, the longest stretch in four years. This happened after the Federal Reserve raised interest rates, weakening the allure of the non-interest-bearing metal. The strong dollar also affected gold, which is priced in the US currency. The two-year Treasury yield has reached its highest level since 2007.

“Restoring price stability is likely to require maintaining a restrained political position for some time,” Said the US Federal Reserve Governor Powell Friday, in remarks at the Federal Reserve’s annual policy forum in Jackson Hole, “Historical record warns severely from the policy of premature mitigation,”  he added.

He reiterated that another “unusually large” increase in the benchmark lending rate may be appropriate when officials meet next month. However, he did not commit to one, saying the decision will depend on “the totality of incoming data and changing expectations.”

Commenting on the market performance, John Finney, director of business development at Sydney-based bullion dealer Guardian Gold Australia, said that “This has to be the most hawkish rhetoric from the Fed chair at some time.”

“Although gold is under pressure from the strength of the US dollar at the moment, if we see an increase in volatility in the US stock market, we can expect gold to receive a safe-haven bid,” he added.

Meanwhile, Senator Elizabeth Warren took aim at the Federal Reserve’s anti-inflation game plan on Sunday, saying she was concerned the central bank could push the US economy into recession.  The senator remarked that she did not believe an interest rate hike could contain current price pressures.

The DXY US dollar index rose to its highest level in 20 years, making gold priced in US dollars expensive for those holding other currencies.

Matt Simpson, chief market analyst at City Index, said gold’s momentum has shifted to the downside, and while there will be a safe haven influx at some point, investors are currently focused on keeping interest rates high.

Echoing the Fed’s position, ECB Governing Council member Isabel Schnabel said central banks must act aggressively to combat inflation, even if it drags their economies into recession. While gold is often considered a safe haven during financial uncertainties, it is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion while strengthening the dollar.

Gold Forecast:

According to gold experts. Gold is likely to head towards $1,700 and has room to go to $1,680. You can get some buyers stepping in around $1,680 to support the market and back to $1,750 again. Data from the US Commodity Futures Trading Commission showed that speculators reduced their net long positions in Comex gold by 15,910 contracts to 30,326 in the week

Today’s Gold Price Analysis:

The continued strength of the US dollar impedes any efforts and attempts for the gold price to recover. Therefore, it is expected that the downward pressure for the gold price will continue until the announcement of US job numbers, the main driver of the markets. Stronger readings would support the dollar and negatively affect gold and vice versa. Until then, it may test new buying levels, the strongest of which are currently 1716 dollars and 1675 dollars, respectively. Whatever the buying opportunity, we do not advise taking any risks.

On the upside, there will be no real change to the current trend without the gold price testing the psychological resistance level of $1800 an ounce.

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The price of the yellow metal has struggled to maintain any momentum after surpassing $1,800 earlier this month. 

• Gold futures snapped a three-session winning streak on Friday, despite a weaker dollar. Investors are watching developments at the annual Jackson Hole Economic Symposium, expecting the event to provide guidance on monetary policy.
• The price of the yellow metal has struggled to maintain any momentum after surpassing $1,800 earlier this month.
• The price of gold tried to recover but its gains stopped towards the resistance level of $1765 per ounce before collapsing towards the support level of $1734 per ounce following Jerome Powell’s statements.

Gold price was relatively flat during the week’s trading and remains down roughly 4% year-to-date. As for the price of silver, the sister commodity to gold, it tried to stay above the $19 level at the end of last week’s trading. The price of the white metal posted a weekly gain of 1.4%, narrowly avoiding a bear market. The economic data cannot support the divergent gold prices because the statistics cannot support or oppose any argument for further increases or decreases in interest rates. For now, financial markets will be keeping a close eye on what happens at the Fed’s annual retreat in Wyoming.

A report indicated that consumer demand in the United States is diminishing, which may affect the economy in general as the fourth quarter approaches. And according to the Census Bureau, US personal spending rose just 0.1% in July, below market estimates of 0.4%. And that was less than a 1% gain in June. This represents the weakest number this year. Personal income rose by 0.2% last month, missing economists’ expectations of 0.6%. While it was the sixth straight monthly gain, it was the worst reading since January’s 0% growth.”

U.S. Treasury yields turned amid a mixed performance, with the benchmark 10-year yield rising 2.1 basis points to 3.045%. And one-year bond yields fell 0.1 basis point to 3.362%, while the 30-year bond yield rose 2.1 basis points to 3.255%. And a rising rates environment is usually bearish for gold because it raises the opportunity cost of owning commodity, as it doesn’t yield a return.

For other metals markets, copper futures rose to $3.7655 a pound. Platinum futures fell to $865.00 per ounce, while palladium futures rose to $2144.00 per ounce.

The price at gold is traded is being affected by the reaction from the release of the economic data. Michigan’s American consumer confidence index for the month of August exceeded expectations at 55.2, settling at 58.2. This affected the price of the yellow metal as investors turned to risk trading. While the personal income and spending data was disappointing, investors remained positive after the impressive data announced earlier in the week.

Initial US GDP data for the second quarter came in stronger than expected on a quarterly and annual basis. On the other hand, initial and ongoing jobless claims came in below estimates, boosting market optimism once again. Durable goods for July missed expectations at 0.6% with a change of 0%, while non-defense capital goods orders for aircraft was higher than the 0.3% expected by the analysts, with a change of 0.4%.

Technical analysis of the price of gold:

In the near term and according to the performance on the hourly chart, it seems that the gold price is trading within the formation of a sharp downward channel. This indicates a strong downward momentum in the short term in market sentiment. Therefore, the bears will target short-term profits at around $1734, or lower at $1730, while the are looking to pounce on potential rebound profits at around $1.741, or higher at $1746.

In the long term and according to the performance on the daily chart, it seems that the price of gold is trading within the formation of a downward channel. This indicates a significant long-term bearish bias in market sentiment. Therefore, the bears will target long-term profits at around $1714 or lower at $1690 per ounce. On the other hand, the bulls will target potential reversal profits at around $1759 or higher at $1782 per ounce.

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The US dollar has strengthened sharply in recent days and there are likely to be further gains if global stock markets decline further from recent highs, but this week’s Jackson Hole Symposium will be the main domestic event for the US currency.

In general, the dollar rose against the euro and the pound sterling at the beginning of the week’s trading session as investors reacted to another sharp rise in natural gas prices in Europe, where they bet that the region is ready for a deep recession. The GBP/USD currency pair fell to the 1.1717 support level before settling around the 1.1810 level at the time of writing. The latest move has returned the currency pair to levels last seen during the height of the Covid panic in March 2020.

In general, the fall in the stock markets naturally helped the demand for the “safe haven” of the dollar, and it is unlikely that the gas crisis will end anytime soon.

“Risk aversion rather than expectations of the Federal Reserve Bank’s policy should remain the main support for the US dollar, which is considered a high-yielding safe haven from here,”said Valentin Marinov, head of the Foreign Currency Research Department at Credit Agricole.

Despite the dollar is rising against both the euro and the pound, Crédit Agricole told clients that the move was starting to look extended, and the two European currencies were beginning to be oversold. According to the bank’s analysts, “our measures of short-term fair value for both EUR/USD and GBP/USD, which include short-term price spreads and measures of risk aversion, do seem to indicate that the recent selling of the two USD pairs has once again moved deep An undervalued area.”

Therefore, a reversal in the opposite direction may occur before Federal Reserve Chairman Jerome Powell’s speech on Friday. But for now, the rebound must be considered temporary.

 “If a persistently tightening message from Federal Reserve Bank President Jerome Powell on August 26 raises global risk sentiment, the dollar may be the main beneficiary,” added Marinov.

The Jackson Hole Economic Symposium, hosted by the Federal Reserve Bank, will be held in Kansas City from August 25 to 27, and its topic is “Re-evaluating constraints on the economy and politics”. Powell is scheduled to speak at 15:00 GMT.

We’re also looking forward to other central bank speakers, with the full line-up likely to be detailed just before Thursday’s proceedings.

“We think this will be a good opportunity to gauge how policymakers think before their next policy decisions, and an opportunity for Fed officials in particular to set clear benchmarks for the market as September’s key data releases approach,” said  Camaxia Trifidi, forex analyst at Goldman Sachs.

Goldman Sachs isn’t looking for fireworks from the Fed chief, saying the conflicting nature of incoming US data doesn’t warrant a clear shift either way. Those looking for stocks higher are hoping that Powell will signal the need to speed up interest rate hikes after the latest consumer price index data softened and showed that US inflation may have peaked.

In fact, any such development will hold the dollar back on the net, allowing the likes of GBP/USD and EUR/USD to recover.

Technical analysis of the GBP/USD

• The recent movement of the GBP/USD currency pair pushed the technical indicators towards oversold levels according to the performance on the daily chart below.
• Despite this, forex traders are afraid of the turnout to buy when the markets’ reaction to what will happen in the Jackson Hole seminar is known.

The US dollar is still supported due to US interest rates expectations and the fear of the strongest British recession. Currently, according to the trend, the closest support levels for the currency pair are 1.1755 and 1.1680 respectively. There will be no chance for a first break of the trend without stability above the 1.2100 resistance, otherwise the trend will remain stable around its losses.

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The price of gold may remain under pressure until the Jackson Hole symposium.

• Gold futures continued their longest losing streak since July, as the rise of the US dollar led to the decline of the yellow metal at the beginning of this week’s trading.
• The price of XAU/USD fell to the support level of $ 1728 an ounce, the lowest for the price of gold in nearly a month.
• Investors had been expecting more hawkish comments from the Federal Reserve, reducing the prospects for a slowdown in tightening efforts.
• The price of the precious metal is retreating from a weekly loss of 2%, which adds to its performance since the beginning of the year 2022 to date by about -4.5%.

As for the price of silver, the sister commodity to gold, it is also retreating and tumbled to $ 18,835 an ounce. The price of the white metal fell more than 6% last week, exacerbating its horrific performance in 2022 by 19.35%. Since investors priced interest rates at around 3.5% by the end of the year, gold prices have become a victim in this market. Several US Federal Reserve officials dismissed the market’s suggestion that the central bank might start cutting interest rates in the face of slowing growth. The aggressive nature of the Federal Reserve has bolstered the US currency. The US Dollar Index (DXY), which measures the value of the US currency against a basket of major currencies, rose to 108.41, and a strong dollar is bad for dollar-priced commodities because it makes it more expensive to buy for foreign investors.

Commenting on the performance, Han Tan, Senior Market Analyst at Exinity said: “Precious metals are fading as the burning US dollar continues its quest to return to recent highs, as markets regain their bets on the Fed and the tightening path.”

The US Treasury market was also higher overall, with the benchmark 10-year yield unchanged at 2.989%. One-year yields rose 6.4 basis points to 3.307%, while 30-year yields rose 0.1 basis points to 3.226%. The spread between the two-year and 10-year bond yields is stable at -31 basis points.

Relative to the prices of other metallic commodities, the price of copper fell to $3.6315 per pound. Platinum futures fell to $861.30 an ounce. Futures contracts for palladium fell to $ 2004 an ounce.

All eyes on Federal Reserve

Overall, gold traded at its lowest level in more than three weeks as Federal Reserve officials reiterated their commitment to tighten monetary settings to curb inflation. Bullion prices capped their first weekly decline in five as investors weighed optimistic statements by policy makers that warn of a rise in US interest rates. Richmond Fed President Thomas Barkin said Friday that the US central bank is determined to return inflation to its 2% target, even if that means risking a recession in the US.

All eyes will be on Federal Reserve Governor Jerome Powell when he speaks Friday at the annual meeting of central bankers in Jackson Hole. He is expected to reiterate the Fed’s determination to continue raising interest rates to control inflation, though he may stop indicating how senior officials will go when they meet next month.

High interest rates weigh on non-interest bearing bullion. Investor demand has faltered, with holdings in exchange-traded funds falling for the 10th consecutive week, according to preliminary data compiled by Bloomberg. Ravindra Rao, Head of Commodity Research at Kotak Securities Ltd. ETFs, said ETFs showed modest buying interest on Friday “the price of gold may remain under pressure as we see a shift from riskier assets to the safety of the US dollar.” He said investors were re-entering.

Today’s XAU/USD Gold Price Forecast:

Bears control over the gold price direction is still the strongest, and the recent losses pushed the technical indicators on the daily chart towards oversold levels. Therefore, it is possible to think about buying gold from the following support levels of 1715 dollars and 1685 dollars, respectively. The uptrend for the XAU/USD price will not return without moving towards the top of $1800 an ounce. The price of gold may remain under pressure until the Jackson Hole symposium.

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• The US dollar recovered strongly after announcing the content of the minutes of the last meeting of the US Federal Reserve, which contributed to the increase in the selling of the gold price.
• Its losses reached the support level of 1760 dollars per ounce before settling around the 1763 dollars per ounce level at the time of writing the analysis.
• The XAU/USD gold price abandoned the $1800 psychological resistance at the beginning of this week’s trading.
• Investors have increased their appetite to buy the dollar as a haven, in addition to the strength factors from the future tightening of the US central bank’s policy, which is negative for gold.

Gold analysts’ expectations in the coming days:

A new institutional analysis has found that the XAU/USD gold price is likely to be supported by continued hedging demand by investors, and a new medium-term technical analysis says a return to the $1835 resistance cannot be ruled out.

The latest research report from the World Gold Council (WGC) showed that they expect the precious metal to remain relatively supported in the near term. “Gold is likely to remain reactive to real prices, driven by the speed with which global central banks are tightening monetary policy in an effort to control inflation,” WGC says in its mid-year analysis. The report adds that although the Fed is likely to continue raising interest rates and creating potential headwinds for gold, many of this hawkish policy is “priced in”. Meanwhile, persistent inflation and geopolitical risks are likely to keep gold in demand as a hedge, the report says.

He adds that “the weak performance of stocks and bonds in a potentially inflationary environment may also be positive for gold.”

From a technical perspective, Bill McNamara, Director of The Technical Trader says that the gold chart deserves a closer look after its latest price move. He stated, “The weekly chart shows that the price is heading to the upside since it fell back to the trading low of $ 1,680 three weeks ago, at which point it tested – successfully – the support in the form of bottoms that were originally formed again in the first half of 2021.”

Over the past four weeks, gold prices have risen 5.6%, their best performance since February/March, when they rose to $2,052.41 an ounce. The analyst added, “Her most recent price movement pushed it to a five-week high, and it should be noted that it does not look particularly overbought at this point (RSI = 61%), which means there may still be room for more approach.” He also said that the next area of ​​potential resistance would be at $1,835 or so, at which point it would have rebounded nearly 38.2% of the selling started in March.

XAU/USD Gold Price Analysis Today:

We still prefer buying gold from every descending level, and the closest and most appropriate buying levels for that are 1754 and 1738 dollars, respectively. On the other hand, according to the performance on the daily chart, the bulls will not control the trend again without moving towards the psychological resistance of 1800 dollars an ounce again. The price of gold will be affected today by the price of the US dollar, the extent to which investors are willing to risk or not, the reaction from the announcement of inflation figures in the euro area, the announcement of the Philadelphia Industrial Index reading, and the number of US weekly jobless claims.

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The price of gold fell after four consecutive weeks of gains as investors assessed the outlook for the hawkish path of the Federal Reserve and on further indications that China is struggling to recover. The price of XAU/USD gold declined at the beginning of this week’s trading, towards the support level of 1773 dollars for an ounce, starting from the psychological resistance of 1800 dollars. The price of gold is stable around the level of 1780 dollars at the time of writing the analysis.

Gold bullion prices fell, after the longest streak of weekly gains in nearly a year. The price of the precious metal has risen amid slowing inflation in the US, supporting the argument that the Fed is less aggressive in raising borrowing costs. China’s central bank unexpectedly cut its key interest rate as it ramped up its support for an economy wracked by virus lockdowns and a deepening property crisis.

Economic data released on Monday showed that the country’s recovery is faltering, which could lead to a decline in physical demand for gold in the world’s largest consumer.

Investors will look forward to the release of the minutes of the Federal Reserve’s July meeting on Wednesday, which may provide clues to conditions that could push the US central bank to tighten again in September. Bets in the financial markets on the size of the next increase ranged between 50 and 75 basis points. Richmond Fed President Thomas Barkin said Friday that the US central bank needs to keep raising interest rates until inflation is on track with its 2% target, even if the economy weakens, to avoid a policy error similar to the 1970s.

How will inflation affect gold?

Inflation in the US is likely to remain elevated in the fourth quarter, which could lead to some headwinds in the near term for gold, although the worst is likely over, said Yeap Jun Rong, market analyst at IG Asia Pte. “Today’s drop could be due to some profit-taking as markets may have already largely priced the inflation-peak narrative.”

Investors are also watching a two-day visit by a US congressional delegation to Taiwan, which risks keeping tensions with China high after House Speaker Nancy Pelosi’s visit earlier this month.

Gold price forecast today:

Despite the recent sales, the price of gold can still rise.

• Stability above the resistance of $ 1780 an ounce supports the movement of the bulls towards the psychological resistance of $ 1800 an ounce, which supports the upward trend of the XAU/USD price.
• The continuation of the current selling operations may push the price of gold towards new buying levels and the closest to it currently 1760 and 1745 dollars, respectively.
• We prefer buying gold from every bearish level, despite the tendency of global central banks to tighten their policy, which is negative for gold.
• It finds momentum from the increase in global geopolitical tensions.

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Despite the announcement of the US interest rate hike, as expected, the price of gold gained momentum and rose towards the resistance level of 1740 dollars an ounce. The US dollar declined following the comments of Federal Reserve Governor Jerome Powell following the decision. The price of gold is stable around the level of 1734 dollars per ounce at the time of writing the analysis. Speaking at a news conference after the Fed’s latest policy meeting, Bank Chairman Jerome Powell stressed that the US central bank remains committed to defeating chronically high inflation. Meanwhile, concern that the Fed’s efforts may eventually cause a growing recession as consumers and businesses suffer from higher prices and increased borrowing rates. Powell missed several opportunities to say the Fed would slow its gains if a recession occurred while inflation was still high.

But Powell also said that the pace of the Fed’s hikes may slow in the coming months now that the key interest rate has almost reached a level that is believed to neither support nor constrain growth. The suggestion helped spark a strong rally in Wall Street markets, with the S&P 500 stock market index up 2.6%. The prospect of lower interest rates in general is fueling stock market gains.

Meanwhile, Powell was careful during his press conference not to rule out another three-quarter point increase when Fed policymakers meet next September. He said that the interest rate decision will depend on what will emerge from the many economic reports that will be issued from time to time. “I don’t think the United States is in a recession,” Powell added at his press conference, noting that the Fed’s rate hike has already had some success in slowing the economy and possibly easing inflationary pressures.

Economic Outlook Today

The Commerce Department said US durable goods orders jumped 1.9% in June after rising 0.8% in May. The continued increase surprised economists who had expected durable goods orders to fall by 0.4%. Excluding a sharp rise in transportation equipment orders, durable goods orders rose 0.3% in June after a 0.5% increase in May. Economists had expected previous transfer orders to rise 0.2%.

Meanwhile, a separate report from the National Association of Realtors showed that pending home sales in the US fell sharply in June. NAR said its pending home sales index fell 8.6% to 91.0 in June after rising 0.4% to a revised 99.6 in May. Economists had expected pending home sales to decline 1.5% compared to the 0.7% increase originally recorded for the previous month.

Today’s XAU/USD Gold Price Forecast:

There is no doubt that the recent move in the price of gold after the announcement of the US interest rate hike is important for the bulls to control the direction of gold. The rise may be stronger if prices move towards the resistance levels of 1755 and 1778 dollars, respectively. As I mentioned before that the last level is important to move towards the level of psychological resistance 1800 dollars, which is of interest to change the general trend to the upside.

On the other hand, the return of the gold price to the vicinity of the support level of 1710 dollars for an ounce is important for the bears to control the trend further. The price of gold will be affected today by the announcement of the growth rate of the US economy.

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With the beginning of this week’s trading, the gold price completed the broader downward path, as the US dollar continues its record gains. Despite fears of the future of the global economic recession and a new outbreak of the Corona virus, the gold price fell to the support level of $1723 an ounce in early trading today, Tuesday, the lowest price for the yellow metal in nine months.

The gold market was hit by the rising US dollar. Despite the hotter-than-expected inflation report this week and mounting fears of an economic recession, gold prices were falling, with most of their losses occurring after the Fed’s tightening campaign began. In general, XAU/USD gold prices are retreating from a weekly loss of about 4%, in addition to their decline since the start of 2022 to date by more than 5%.

And for the price of silver, the sister commodity of gold, adding to its massive drop in 2022. Silver futures fell to $19.15 an ounce. The price of the white metal also decreased by about 3% last week, adding to its decline since the start of the year 2022 to date by about 18%. The biggest factor in the metal commodity price crash was the dollar’s rise. Where the US dollar index (DXY), which measures the performance of the US currency against a basket of major currencies, rose to 108.05, from an opening at 106.93. In general, the index achieved weekly gains of 2%, which raised its gains since the beginning of 2022 to date to nearly 13%.

The strongest bearish price is for commodities priced in dollars because it makes them more expensive to purchase for foreign investors.

All in all, the Fed is preparing to push the trigger to raise the US interest rate by another 75 basis points this month in the face of high inflation. This has caused chaos in the bond market as investors anticipate a recession over the next two years. The US Treasury market was mixed, with the benchmark 10-year bond yield dropping 11.2 basis points to 2.989%. However, the main focus is on yield curve inversion between 2-year and 10-year yields. This is an important indicator of a recession because it has predicted all but one of the economic slowdowns since 1955.

The price of gold is sensitive to a high interest rate environment because it raises the opportunity cost of holding non-yielding bullion. Commenting on this, Naim Aslam, chief market analyst at AvaTrade said, “The price movement of the precious metal is largely driven by the dollar index, which is holding on to its strength.” Meanwhile, the US Consumer Price Index for June (CPI) will be released on Wednesday, with economists expecting a headline reading of 8.8%. If accurate, this would be up from the 8.6% figure in May.

In other metals markets, copper futures fell to $3.4055 a pound. Platinum futures fell to $862.60 an ounce. Palladium futures rose to $2,183.00 an ounce.

On the other hand, stocks fell, with traders preparing for a heated inflation reading and the start of a major earnings season that may provide clues as to whether the US economy is heading into a recession. The sell-off in shares of huge companies such as Tesla Inc. and Apple Inc. weighed on the stock market – which saw its lowest trading volume in 2022. Shares of Twitter Inc. fell. By 11 percent, Elon Musk walked away from his $44 billion deal to buy the company, setting the stage for a legal battle.

Amid a wide-ranging confluence of economic challenges, investors are waiting to see if earnings falter or whether companies will drastically lower their forecasts. One reason for caution is the split between two major forces on Wall Street. Analysts are betting that Corporate America is flexible enough to pass on higher costs to consumers at a time when many strategists aren’t really convinced that this is the case.

Malley noted that stocks are trading at valuation levels that are seen as highs – not lows. He added that the current price-to-sales metric is, for example, at the same level from the market tops in 2020 and 2018 and in the tech bubble in 2000.

Gold Technical Analysis

So far, the general trend of the gold price is still bearish, taking into account that according to the performance on the daily chart, the recent losses of gold moved the technical indicators towards strong oversold levels, and accordingly, gold investors may think about buying gold from the support levels 1715, 1690 and 1660. On the other hand, the bullish view of the gold price will not return without breaching the psychological resistance level of 1800 dollars an ounce as soon as possible.

I still prefer buying gold from every bearish level.

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The sharp gains of the US dollar strongly contributed to the collapse of the gold price to the level of 1805 dollars an ounce. This is the lowest for the price of the yellow metal a month ago, before settling around the 1808 dollars an ounce at the time of writing the analysis. 

The losses in the gold market came as dollar and Treasury yields continued to rise ahead of the Federal Reserve’s monetary policy announcement scheduled for Wednesday. The Federal Reserve is widely expected to raise the US interest rate by 50 basis points. In this regard, Goldman Sachs and JPMorgan Chase & Co. said they expect the Fed to raise interest rates by 75 basis points.

The accompanying statement from the US central bank is expected to provide clues about future interest rate hikes and policy stance.

After that, the Bank of England is expected to raise interest rates by a modest 25 basis points on Thursday despite data on Monday showing a contraction in the country’s GDP in April. The yield on the 10-year US Treasury bond rose to about 3.45%. The dollar index rose to a two-decade high of 105.46 today.

As for US economic data today, data from the Labor Department showed US producer prices rose 0.8% on a monthly basis in May 2022, after rising 0.4% in April. The producer price index for final demand, excluding food and energy, rose 0.5% from the previous month in May 2022, accelerating from a downwardly revised 0.2% increase the previous month. On an annual basis, core producer prices rose 8.3%, down from a revised 8.6% increase in April.

Annual product inflation in the US fell slightly to 10.8% in May 2022 from 10.9% in April and a 21-year high of 11.5% in March. On the other hand, according to a report issued by the National Federation of Independent Business, the NFIB Small Business Optimism Index in the United States fell to 93.1 in May of 2022, the lowest level since April of 2020, compared to 93.2 in April.

According to the technical analysis of gold: There is no doubt that the movement of the price of gold towards the psychological support of 1800 dollars per ounce supports the control of the bears and the change of the direction of gold to a bearish one. Gold investors are preparing for new buying levels, and I see that the support levels of 1778 and 1760 dollars, respectively, are the most appropriate to think about that. The recent losses pushed the technical indicators towards oversold levels. The price of gold may remain under downward pressure until the reaction from monetary policy decisions of the US Federal Reserve and the statements of its governor, Jerome Powell. Indications of the future of raising the US interest rate will have a strong reaction on the US dollar, and therefore the price of gold.

On the upside, the price of gold needs to return to the vicinity of the resistance levels of 1828 and 1845 dollars, respectively, for the bulls to return to the launch.

There is no doubt that the renewed gains of the US dollar, especially after the announcement of the strong US job numbers at the end of last week, negatively affected the gold market.

The price of the yellow metal fell to the support level of 1837 dollars an ounce at the time of writing the analysis. The strong dollar is negative for the price of gold, but as I mentioned before that the yellow metal finds momentum from other factors. Factors include global geopolitical tensions led by the continuation of the Russian / Ukrainian war and the survival of Covid 19 in the negative impact on the second economy in the world.

Global stock markets recently rebounded after Beijing’s latest move to ease Covid restrictions boosted speculation that this would help ease supply chain pressures. Meanwhile, the sell-off in Treasuries has sent 10-year yields back above 3 percent, a level not seen since mid-May and potential headwinds for risk sentiment. Stocks struggled to make a sustainable recovery on fears that higher borrowing costs would hurt growth and corporate profits.

Data last week showed that US employment was stronger than expected for the month of May and indicates that the Federal Reserve will not hesitate on its hawkish course to curb price pressures. But the economists at Goldman Sachs Group Inc. They said the Fed might be able to implement its aggressive plan to raise interest rates without pushing the country into recession.

Friday’s US jobs report allayed some fears that the world’s largest economy is slowing too sharply, but also reinforced the view that the Federal Reserve will continue to raise US interest rates to combat inflation. Accordingly, investors bought shares last week, and US stocks witnessed the fourth consecutive week of inflows with the continued rise of the bear market.

On the other hand, the price of crude oil stabilized around $119 a barrel, after Saudi Arabia indicated confidence in demand with higher-than-expected prices in Asia. Meanwhile, the United States is said to be considering allowing more sanctioned Iranian oil to enter global markets to counteract reduced Russian supplies.

Meanwhile, the European Central Bank is set to announce an end to bond purchases this week and officially begin a countdown to raising borrowing costs in July, joining its global peers who are tightening monetary policy in the face of severe inflation. The European Central Bank plans to bolster its support for the weak debt markets in the euro zone if they suffer a sell-off, the Financial Times reported.

According to gold technical analysis: On the daily chart, the price of gold is still moving in its last range, and it will be the closest to new buying levels if it moves towards the support levels of 1828 and 1815 dollars, respectively. On the other hand, the bulls will need to breach the resistance levels of 1875 and 1888 dollars, respectively, to confirm the strong and continuous control over the direction of gold. I still prefer buying gold from every bearish level.